Marketing

Ask the Expert

Financial Modeling

One of the most important business plan exercises
is to create a viable financial model for your business. The model should
included a complete "integrated" model that includes the following:

Set of Business Assumptions for all other statements

Profit and Loss Statement

Cash Flow Statement

Balance Sheet Statement

Financial Ratios

What-If Scenarios

The financial model should be used to not only test all your assumptions
but provide multiple scenarios of your plan, so you can explore the possibilities
of better than expected results against worst case scenarios.

The important thing in this exercise is to find the critical control
elements of the model. i.e. is your plan dependent on supplier pricing,
competitive prices, labor costs, capital costs, etc.

By solving for Cash Flow required, one of the most important issues will
come directly to the forefront. Payment and collection cycles, capital
requirements, loan terms and interest rates as well as tax requirements
come to the forefront.

When solving for the cash necessary to fund you venture, one should NEVER
rely on a yearly only model. Annual cash flow statements hide the true
cash flow picture.

Investor Returns and Deal Structuring

A strong financial model and valuation also gives you flexibility and
a strategy for funding your venture. If there is never enough cash to
pay investors or lenders, then you either need to change your business
model, or modify the terms of your deal structure to match the financial
model.

"Our
goal is to provide you the best funding tools available and to get your
project
funded quickly."Bill
McCready, CEO
Venture Planning Associates,

"Out
of the hundreds of sites offering business plan products and services, your VenturePlan
site is among the best, if not the best. "Mike Rischard CPA, President, Agilecor

"When
we received first round funding ($5 million) the VC firm asked us to show
them
how our financial models were created. They wanted to use OUR TEMPLATE (which
we developed from the 7 Venture Capital Reports) to help them evaluate alternative
scenarios for their portfolio companies!" Michael
.Lay, CFO, e-Commerce Internet Company